STOCKS RALLYING TO END 2008
The Dow climbed on Tuesday after the government expanded its bailout of the auto industry, bolstering hopes lawmakers would continue to take steps to minimize the severity of the year-long recession.
Meanwhile, the Nasdaq received a boost as investors put money into big-cap technology companies that have larger cash reserves and are seen as better positioned to withstand the economic slump.
Also investors shrugged off another round of economic reports that pointed to a deepening recession. Prices of single-family homes plunged a record 18 percent in October, while consumer confidence also fell to a record low.
Strategy Session with the Fast Money Traders
We’re 4600 points away from break even, exclaims Jeff Macke. We can do it, he adds sarcastically.
There were a lot of bottom pickers out there today, muses Pete Najarian. And volume was light until the last 15 minutes of the session. Don’t be deceived.
Treasuries were up again today, adds Quint Tatro. We’re not going to have a sustained rally until that stops happening. And, I’m seeing technical sell signals.
Over the last 6 weeks there’s been horrible economic data, counters Joe Terranova. The market is digesting bad news.
That’s a great point, adds Tattro. But let others jump in for you.
GM JUMPS ON FINANCE ARM BAILOUT
The Bush Administration said late Monday it would extend an additional $1 billion loan to General Motors and take a $5 billion stake in the automaker's financing arm, GMAC, in the latest move to ease the credit crisis.
In turn, GMAC said Tuesday that it would begin offering financing to consumers with credit scores of 621 or higher, an easier standard than the 700-score limit it had imposed in October as credit tightened.
Meanwhile, GM is offering zero-percent financing on several vehicles, and rates no higher than 5.9 percent on more than three dozen 2008 and 2009 models.
It’s more environmentally friendly than lighting 6 billion on fire, bristles Jeff Macke.
The trade in autos is Toyota , adds Joe Terranova. Forget GM and Ford.
The new 0% for 5 years should get people into the showrooms, adds Pete Najarian.
I’d play Autozone or AutoNation because people will repair their cars before they buy new one, counters Quint Tatro.
ALCOA, '08 COMMODITY CASUALTIES REBOUND
Materials names including Alcoa and Freeport-McMoran closed higher on Tuesday after investors scooped up shares of these beaten down stocks. The materials sector has been the 2nd worst performer in 2008 behind the financials.
S&P’s 3 Worst Sectors in 2008
You can’t be a buy and hold guy on these stocks, warns Jeff Macke. These are trades. It’s the other side of momentum mountain.
I also think in 2009 you can play materials for a trade, adds Joe Terranova. 2009 will be about hit and run trading.
The commodities names have been trading like they’re going out of business, explains Pete Najarian. But many will survive. However both Macke and Terranova are right -- it’s still a trading environment.
BUYING ON BAD NEWS: RETAIL
Despite reports that this year’s holiday shopping season was the weakest in 40 years shares of Macy’s and other retailers surged on Tuesday.
Sell retail stocks, exclaims Jeff Macke. Many are going to go backrupt. They can’t afford to pay off their debt. Be careful.
And you’re going to have retailers battling with the vendors over those big discounts, adds Joe Terranova.
BUYING ON BAD NEWS: BUILDERS
Although new data shows the S&P/Case-Shiller Home Price Index plunged the HomebuildersETF climbed on Tuesday.
It’s a dead cat bounce, says Quint Tatro, Stay away.
The homebuilders will likely continue to tumble with some pops to the upside, says Pete Najarian. Again, it’s a trading environment and not an investing environment.
It will either take time or an outbreak of arson to turn around this sector, adds Jeff Macke.
If you’re looking for a trade check out the pattern in the iShares Dow Jones US Utilities chart ,adds Tatro. From a technical basis it looks like utilities could be heading for a leg down. I’m playing it by being long the ProShares UltraShort Utilities .
OIL SPUTTERS BELOW $40
Oil prices fell $1 on Tuesday after data showed a sharp fall in weekly U.S. retail gasoline demand. The selling happened despite expectations of further Saudi supply cuts and tension in the Middle East.
Inventories are coming out again on Wednesday, explains Joe Terranova. That should be a drag on oil, again.
I’d look at ExxonMobil and other integrated oil, adds Tatro. I think they’re coming down and I’m short.
CAN 2008 BEAT 1907?
1907 was a terrible year for the Dow; the index lost 38%. So far, the Dow has slipped 35% in 2008. Will it overtake 1907 – the year of the great bank panic.
Why can’t we get back to even on Wednesday, says Jeff Macke sarcastically. It’s only 4600 points.
I don’t think there will be a catalyst to send the Dow 3% lower – says Pete Najarian with relief.
OPTIONS ACTION: ANGLO AMERICAN (AAUK)
Pete Najarian is seeing unusual options activity in Anglo American .
The volume of call buying suggests to Pete that this stock could go higher.
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Trader disclosure: On Dec. 30th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (MSFT), (TM), (WMT): Pete Najarian Owns (AAUK) And Is Short (AAUK) Calls; Pete Najarian Owns (DOW) Call Spread; Pete Najarian Owns (XHB) Call Spread; Pete Najarian Owns (ENER) Call Spread; Tatro Owns (JPM), (WPRT); Quint Tatro Is The Principal Of Tatro Capital; Tatro Capital Owns (INTC), (SDP), (DXO), (WPRT)’ Tatro Capital Is Short (AAPL), (GOOG), (XOM), (CVX)
GE Is The Parent Company Of CNBC
Terranova Owned (GS) On 6/3/08; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (OFC), (DLR), (EXR), (IGE), (MAC), (DBC), (DBV), (SKT), (UA), (CLB); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights